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Families lose thousands after aged-care home fails

Bingo. Most people who receive aged-care services are not living in a residential aged-care facility. Photo: Louise Kennerley

Dozens of families of aged residents at a collapsed respite home in Melbourne's south-east have lost thousands of dollars in fees.

The ABC reported on Friday that the families of residents of the Mentone Gardens home had been told their money would not be recovered.

Mentone Gardens went into administration in June with debts of more than $4 million.

According to the ABC, the administrator has referred the case to the corporate regulator.

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The ABC has spoken to families who have paid deposits to Mentone Gardens of up to $400,000.

More to come

COMMENT

When most people hear the words "aged care" they think "nursing home", writes Noel Whittaker This is normally quickly followed by the words "not me!"

Aged care decisions, whether for yourself, a spouse or a family member are complex and the choices people face are far more diverse than simply to stay at home or move into an aged-care facility.

The statistics show that most people who receive aged-care services are not living in a residential aged-care facility. More than 1 million people in Australia receive aged-care services and support, of whom fewer than 200,000 receive care in a permanent residential facility. Staggeringly, the number of people expected to be receiving aged care in 2050 is 3.5 times these figures.

There are many alternatives to residential aged care, and it is not uncommon for people seeking care, companionship and domestic support to enter into living arrangements that are not regarded as formal aged care.

For example, after the death of a partner, a parent may move in with children, or vice versa, and in doing so, perhaps unknowingly, establish a granny flat right or a life interest in the property.

Similarly, the inability to maintain the family home and the social isolation that can come from the death of a spouse or reduced mobility often leads to a decision to move to an over 55s community or retirement village.

In Victoria and South Australia there are also state-governed facilities, known as supported residential services that people can access either temporarily or permanently.

Mentone Gardens was one of these. A number of families are reported to have paid large deposits to the operator, up to $400,000 in one case, of which they are unlikely to get any back.

What you pay to a retirement village, over 55s community or supported residential service may look a lot like an accommodation bond paid to an aged-care facility but only accommodation bonds paid to residential aged-care facilities (governed by the Aged Care Act) are guaranteed by the government.

Unfortunately, a few facilities have gone broke in recent years.

While the need to find alternative accommodation is distressing for the residents and their families, the accommodation bonds paid to these facilities have been repaid to the residents or transferred to their new aged-care facility – to be repaid when they leave.

Aged-care choices are complex. They span a different legal and financial arrangements, each with their own tips and traps. There is no right, wrong or best answer. It will come down to an individual's preferences.

What is important is that you make informed choices, that you understand the legal and financial arrangements, what accommodation, care and services you will receive, when you will need to move from one type of care to another, what it will cost, the effects on pension and other government entitlements, the likely tax consequences and the effect on your estate planning.